House begins work on budget that avoids steep cuts

By THE ASSOCIATED PRESS

SPRINGFIELD – The Democrat-controlled Legislature began piecing together a new state budget Tuesday that avoids the steep cuts of recent years and also gave final approval to a historic expansion of Medicaid, as Republicans accused their colleagues across the aisle of having "an insatiable appetite to spend money we don't have."

Lawmakers still must deal with Illinois' worst-in-the-nation state pension crisis – a nearly $100 billion problem that remains unresolved with just days to go in the legislative session. Votes also are expected this week on two other measures that give Illinois its best chance at generating new revenue: a proposal to expand gambling and another to regulate a high-volume oil and gas drilling process known as "fracking."

A House committee gave initial approval to a $6.6 billion spending plan for elementary and secondary education. It keeps general state aid level for the first time in at least four years, though schools will continue to receive just 89 percent of the funding amount set in state law. The proposed budget also avoids further cuts to school transportation, bilingual education and early childhood programs.

The full House approved an approximately $12 billion human services budget. It uses an unanticipated increase in revenue to pay a backlog of bills owed to human services providers. It also allows the state to put money toward areas that qualify for federal matching funds, increasing the total amount available to spend in the fiscal year that begins July 1, said Rep. Greg Harris, the Chicago Democrat who chairs the appropriations committee.

"The task that was before us was enormous, but we were trying to do it in the most responsible way possible that has the least negative impact on our communities," Harris said.

The House gave final approval to several pieces of the approximately $35.3 billion general fund budget late Tuesday. The proposals then must go to the Senate. Democrats in that chamber worked with their House colleagues to craft the plan, drawing criticism from Republicans who said they were shut out of the process. All House Republicans voted no on the bills approved Tuesday.

Republican Leader Rep. Tom Cross said the budget increases spending by $2 billion over the current year. He accused Democrats of refusing "to put a lid on spending."

"Until we do pension reform and fully implement Medicaid reform, we will continue to go in this vicious circle... [There's an] insatiable appetite to spend money we don't have," Cross, of Oswego, said.

Rep. Jim Cavaletto, a Salem Republican, said the process was being rushed. Budget staff was still working on the budget into the early hours of Tuesday morning, and some legislators said they received their information just before the committee votes.

"You're talking about billions of dollars, and we have one day to pass judgment on this," Cavaletto said.

Harris said that for the first time in years, the proposed human services budget doesn't carry over unpaid expenses from the current year, and it accounts for the full expenditures each agency expects for the 2014 fiscal year.

In prior years, legislators passed budgets they knew didn't provide enough money to cover expenditures – a tactic that fiscal experts have criticized as "budgetary gimmicks." Agencies would have to return to the Legislature for additional funds, or their shortfalls were carried over into the next year, as the state's backlog of unpaid bills grew.

David Vinkler, associate state director of advocacy and outreach for AARP Illinois, called the latest spending plan "a great step forward." He said programs that help seniors stay in their homes, such as the community care program and Meals on Wheels, have been working on a deficit budget for about a decade.

"I think it's a realistic budget that we haven't seen in a long time," Vinkler said.

Lawmakers say the state is benefiting from an improved economy and a one-time increase in revenues of about $1.3 billion in April. That jump was attributed to an increase in people and businesses selling assets at the end of 2012, before new tax laws took effect.

But the brighter economic outlook is still overshadowed by the state's massive unfunded pension liability.

The House and Senate have yet to reach an agreement on which of two rival pension reform proposals to move forward, or on any potential compromise. The House approved a plan sponsored by Speaker Michael Madigan that would unilaterally cut pension benefits for public employees and retirees, raise the retirement age and require employees to pay more.

On Tuesday, its supporters said the plan would save the state $187 billion in payments over the next 30 years — more than three times the amount a rival plan approved in the Senate is estimated to save.

"This is a solution of the magnitude that we need in order to be able to solve the crisis," said Rep. Elaine Nekritz, a Northbrook Democrat. "We hope the Senate will take a look at this and see what we see."

Senate President John Cullerton believes the House's plan violates a clause of the state constitution that says pension benefits cannot be diminished and is likely to be thrown out by the courts — ultimately saving nothing.

Cullerton and public employee unions instead want the House to take up a union-backed proposal that passed the Senate. That plan is estimated to save up to $58 billion over 30 years, depending on several benefits options available to state workers.

The Medicaid expansion – a key part of President Barack Obama's signature health care law – would extend coverage to low-income adults without children. Officials estimate up to a half a million uninsured Illinoisans will be eligible to enroll. They expect about 342,000 people will do so by 2017.

The federal government will pay for the first three years. Republicans opposed it because they worried about how the state would cover future costs.

Quinn supports the expansion and said Tuesday he looks forward to signing it.